Startup Throwdown - Yelp vs. Square vs. Groupon vs. FourSquare

Four heavyweights – Yelp, Square, Groupon, FourSquare – have set their sights on what has been, over the last few decades, a tough nut to crack: the local business owner.

Each begun focusing on a specific problem:

• Yelp – crowd-sourced reviews to help consumers choose where to go
• Square – simple POS solution for merchants
• Groupon – ridiculously low-priced deals to give consumers value and help merchants acquire customers
• FourSquare – location based check-ins to meet/find friends and then help merchants identify and reward the most loyal

But now they’re collectively focused solving a broader range of problems for local businesses (reservations, bookkeeping, marketing), putting them on a collision course with each other. Three of these four have experienced flattening growth, which has driven them to look for these bigger opportunities. The one still growing? My bet for the winner: Square.

Why Square? The fundamental unit of survival for a small local merchant is getting paid. Square makes it dead simple and this is their core competency. Others can copy (as Groupon is) but these players all have relationship baggage with merchants:

• Yelp has on-going conflicts with establishments in asking (blackmailing?) merchants for advertising spend to show more positive reviews
• Merchants have a lot of backlash against Groupon as they’ve learned steep discounts directed to the most price-sensitive customers surprisingly doesn’t lead to loyalty
• lack of traction with mainstream America for FourSquare, where the lack of urban density and foot travel lead a lot of people to not “get” it. FourSquare has since pivoted into Yelp’s space and its mobile-first focus may help them gain ground, but they have a lot of it to make-up.

This gives Square a big head start. With this foothold, they have many degrees of freedom to extend other services to merchants – accounting and marketing/lead gen solutions being the next most difficult challenges for local businesses.

Two other players to watch in the small business space which could make more noise than Yelp, FourSquare or Groupon are Intuit and ThriveHive. Intuit already has a significant user base with its accounting solution for small businesses (they themselves are trying to rampup in thepayment processing business). ThriveHive seeks to be the digital marketing as asubscription solution.

What a powerful combination if Square were to buy ThriveHive. Or if Intuit were to simply buy both. Their purchase of Mint a while back shows they’re willing to acquire when someone has them beat – we’ll have to see.